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how shifts in the demand and supply curves affect the market equilibrium price and quantity.
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how shifts in the demand and supply curves affect the market equilibrium price and quantity.
(e) the term “progressive tax.”
(f) a Keynesian AD/AS diagram (with an upward sloping AS curve) and how an increase in government spending (funded partly by Danish block grants) could affect Greenland’s real GDP in the short run.
(g) Using Table 3, the total income tax paid by the low-income group in Greenland in 2021. Assume of the population and that each earns the stated average income. Show your workings.
(h) Using information from the text and Tables 1 and 3, two reasons why persistent inequality (as indicated by the Gini coefficient and tax data) could be harmful to Greenland’s long-term economic growth.
(i) Using the text/data provided and your knowledge of economics, recommend a policy that could be implemented by Greenland’s Parliament to reduce income inequality and support long-term economic growth. your recommendation.
how excess demand or supply signals the need for price adjustment in a market economy.
Greenland, an autonomous territory of Denmark, is the world’s largest island with a population of about people. The economy relies heavily on fisheries (accounting for more than of Greenland’s total exports), public sector services financed through grants from Denmark, and (increasingly) tourism. Recent explorations suggest that Greenland has untapped reserves of minerals and rare earth elements. However, high infrastructure costs and environmental considerations pose challenges to diversification.
Real GDP growth has been volatile due to changes in global demand for fish products and fluctuations in fish prices, while the population faces income inequality concerns. Recent debates in Greenland’s Parliament (Inatsisartut) focus on reforms to taxation and public spending, seeking to foster inclusive economic growth and reduce income disparities.
Table 1: Key Macroeconomic Indicators of Greenland (2018–2021)
| Indicator | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|
| Nominal GDP (bn DKK) | 15.8 | 16.5 | 16.3 | 17.0 |
| Real GDP growth (%) | 2.4 | 3.0 | -1.2 | 2.1 |
| Unemployment rate (%) | 6.2 | 5.5 | 7.1 | 6.4 |
| Gini coefficient | 0.32 | 0.34 | 0.35 | 0.35 |
| Government budget balance (% of GDP) | -2.2 | -1.5 | -4.0 | -3.0 |
Table 2: Fish Exports Data (2019–2021)
Table 3: Income Distribution and Taxation (2021)
Figure 1: Simplified market for Greenlandic halibut (2021)
(b) Based on Table 1, Greenland’s average annual real GDP growth rate for 2018–2021 using the arithmetic mean of the four annual rates (including the negative value for 2020). Show your workings.
(c) Using the data from Table 2 for 2020 and 2021, the percentage change in total export revenue (in DKK) from Greenlandic halibut.
(a) the concept of social surplus.
(b) Using real-world examples, reductions in the minimum wage as a measure to maximise resource allocation in the labour market.
(a) how the price mechanism responds to eliminate a shortage in a competitive market.
(b) Using real-world examples, the effectiveness of the price mechanism in resolving shortages compared to non-price alternatives.
(a) Using information from Table 1, Greenland’s approximate nominal GDP per capita for 2021, given that the population was . Show your workings.
(d) Referring to Figure 1, assume the world price for Greenlandic halibut rises from DKK per tonne to DKK per tonne. Using the PED value of for 2021 from Table 2, the approximate percentage change in quantity demanded for Greenlandic halibut.
| Year | Fish exports (tonnes) | Average price per tonne (DKK) | Estimated PED for Greenlandic halibut |
|---|
| 2019 | 25 000 | 25 000 | -0.8 |
| 2020 | 24 000 | 27 500 | -0.7 |
| 2021 | 27 000 | 28 000 | -0.6 |
| Income group | Share of total population (%) | Average annual income (DKK) | Tax rate (%) |
|---|
| Low-income | 25 | 140 000 | 35 |
| Middle-income | 50 | 250 000 | 40 |
| High-income | 25 | 600 000 | 45 |
